News & Media

Aurora Funds Management Limited, the responsible entity of the Aurora Fortitude Absolute Return Fund (AFARF), advises that the extraordinary resolutions put to unitholders were not approved by AFARF unitholders earlier today.

• Resolution 1 (Removal of Aurora as the current Responsible Entity) was not passed.
• Resolution 2 (Appointment of Millinium as the new Responsible Entity) was not passed.
• Resolution 3 (Winding up the Fund) was not passed.

Accordingly, Aurora will remain the responsible entity of AFARF and will continue to act as the responsible entity of AFARF and seek to accomplish the investment objective and strategy of AFARF.

VOTE NO – VOTE AGAINST ALL RESOLUTIONS

 CURRENT MANAGEMENT DRIVING UNITHOLDER VALUE
 THE PROPOSAL TO REPLACE RESPONSIBLE ENTITY JEOPARDISES STRATEGY WITH NO STATED ALTERNATIVE
 PROPOSED REPLACEMENT RESPONSIBLE ENTITY ALSO HAS NO KNOWN STRATEGY/AGENDA
 WAM’S INTENTIONS ARE UNDISCLOSED

By now you would have received a Notice of Meeting of unitholders in the Aurora Property Buy-Write Income Trust (AUP) scheduled to be held on 6 December 2016 (Meeting) from entities associated with Wilson Asset Management (WAM), seeking to replace your Responsible Entity (RE), Aurora Funds Management Limited (Aurora).

The Directors of Aurora are considering the validity of the Notice of Meeting and the eligibility of those entities stated to have convened the Meeting.

In the meantime, the Directors strongly recommend that you vote your AUP Units AGAINST all resolutions set out in the Notice of Meeting, and an additional proxy form accompanies this letter which allows you to appoint a representative of Aurora as your proxy should you be unable to attend the Meeting. The costs associated with the production and distribution of this letter are being met by Aurora itself and not by AUP.

Read more here.

VOTE NO – VOTE AGAINST ALL RESOLUTIONS

 CURRENT MANAGEMENT DRIVING UNITHOLDER VALUE

 AURORA HAS IMPLEMENTED CLEAR STRATEGY TO ADDRESS TRADING BELOW NTA

 WAM’S PROPOSAL TO REPLACE RESPONSIBLE ENTITY JEOPARDISES STRATEGY WITH NO STATED ALTERNATIVE

 PROPOSED REPLACEMENT RESPONSIBLE ENTITY ALSO HAS NO KNOWN STRATEGY/AGENDA

 WAM’S INTENTIONS UNDISCLOSED

By now you would have received a Notice of Meeting scheduled to be held on 6 December 2016 (2nd Meeting) from entities associated with Wilson Asset Management (WAM), seeking to replace your Responsible Entity (RE) Aurora Funds Management Limited (Aurora).

The Directors of Aurora are considering the validity of the Notice of Meeting and the eligibility of those entities stated to have convened the 2nd Meeting.

In the meantime, the Directors strongly recommend that you vote your Units AGAINST all resolutions set out in the Notice of Meeting, and an additional proxy form accompanies this letter which allows you to appoint a representative of Aurora as your proxy to do so should you be unable to attend the meeting.

HHY Performance

HHY’s performance under Keybridge/Aurora management has been strong, as evidenced by a 17.27% return after taxes and management fees for FY16.

Read more here.

Over the last few weeks it appears that Gina Rinehart’s Australian Outback Beef (67% Hancock Prospecting/33% China’s Shanghai CRED) has won the bidding war for the Adelaide-based pastoral company S.Kidman & Co Ltd.  If this $365 million deal is approved by the Foreign Investment Review Board (FIRB), the combined pastoral empire will own 11.9 million hectares or 1.5% of Australia.  Food production/agriculture is an area in which Australia possesses a global comparative advantage in production, unlike car manufacturing where taxpayers may have trouble discerning the benefit they have received from the billions “co-invested” in the production of motor vehicles which will cease in 2017 with the closure of Holden’s factory at Elizabeth in South Australia.

In this note we look at the extent to which opportunities for investors in getting exposure to listed agricultural companies has diminished over the last ten years by takeovers,  and the depth of foreign interest in ASX-listed agricultural companies.

Time Horizons

We see that the biggest factor in the reduction in the number of listed agricultural companies is the mismatch in investment horizons between equity owners such as institutional fund managers and foreign buyers like sovereign wealth funds. Fund managers (including the author of this piece) spend too much energy focusing in on delivering quarterly returns ahead of their peers to retain funds under management, whereas foreign buyers can often take a longer view that the value of food or the supply of arable land servicing the growing urban populations of Asia will be worth more in coming decades.

Read more here.

Over the last two weeks investors have had a wild ride with the markets fretting over the outcome of the US election, and in the middle of this the Australian banks reported their profit results which gained very little attention. We have no intention of adding to the pile of “expert opinions”, nor commentating on what a Trump presidency means for Australian equities, as we see it as having a pretty minimal impact. Market pundits fretting over the impact of the US starting a trade war with China; ignore the fact that China holds 10% of the $10 trillion publically traded US debt. Given the new government’s fiscal stimulus plans and the associated deficits and thus increased borrowing; it makes little sense for the US to antagonize its largest creditor.

In this piece we are going to look at the common themes emerging from the banks’ results, differentiate between them and hand out our reporting season awards to the financial intermediaries that grease the wheels of Australian capitalism.

Read more here.

Attached is the Notice of Adjourned Meeting, setting out the items of business to be considered and voted on by AFARF unit holders, together with important information and a proxy form. Aurora
recommends all unit holders carefully read the Notice of Adjourned Meeting prior to deciding on how to vote on each resolution and submitting any further proxy forms.

Unit holders who have previously submitted a proxy vote are encouraged to submit a new proxy form directing their proxy how to vote on all resolutions to be considered at the Adjourned Meeting. Only unit holders listed on the AFARF unit register as at 10:30am on 28 November 2016 (being the record date) are entitled to vote on the Proposed Resolutions.

Read more here.

“You’ve got to know when to hold ’em, Know when to fold ’em, Know when to walk away and know when to run, You never count your money when you’re sittin’ at the table, There’ll be time enough for countin’ when the dealin’s done”.

A key component in short selling is knowing when to close out a short or in the words of the Gambler knowing when to walk away. Earlier this week we closed out the one of our largest short positions in the Dividend Income Fund, a long standing short in Seven West Media.  We see that investment research from the investment banks is generally near to useless for investors looking to close out a short as either a) the bank has ceased coverage of the stock, b) the company is still covered by the analyst who still has a buy recommendation despite the massive fall, as they are desperately hoping it will recover and they will keep their job or c) the analysis is far too negative and bitter towards the company that they believe has unfairly duped them.

In this week’s piece I am going to look at the mechanics of closing out a successful short position (essentially buying shares on the ASX to deliver back to its original owner), along with the dangers of being too greedy.

Read more here.

In accordance with the Listing Rule 3.13.2 and section 251AA(2) of the Corporations Act, the following statistics are provided in respect of proxy votes received for each resolution put to the General Meeting of the Aurora Absolute Return Fund this morning. The instructions given to validly appointed proxies in respect of the resolutions were as follows:

The resolution was rejected.

Read more here.

Over the last two years listed property has been the top performing sectors on the ASX 200 outperforming the broader equity market. Whilst Australian other sectors in the equity market have faced concerns about a rising and then falling AUD, falling commodity prices, Eurozone issues and bank capital raisings, listed property has seemingly sailed under the radar up until mid-July 2016 and has since fallen 12% over the past quarter. In this note we will look at what has caused this fall, what is going on in listed property together with our positioning in the Aurora Property Buy-Write Income Trust (AUP) in the various property sectors.

Read more here.

This week,  the CEOs of the four major banks have been grilled by the House of Representatives’ Standing Committee on Economics, with politicians demanding  to know why Australian banks have higher returns on equity (13.8% ROE)  and profits than those in other Western countries and whether this is due to their market power. This appears to be both an exercise in political point-scoring and data mining, in that I strongly doubt that it would be in the national interest if the Australian banks generated the returns of the European Banks (4% ROE excluding Deutsche Bank). Weak returns limit internal capital generation and increase financial precariousness and thus the risk of taxpayer funded bailouts. Indeed if one looks at a more comparable and similarly structured banking market such as Canada (ROE 14.8%), that has five dominant trading banks, in a highly regulated market; shareholders could make the case that the Australian bank CEOs are not trying hard enough to generate profit!

In this week’s piece we are going to look at different measures of corporate profitability for large Australian listed companies, looking beyond the billion dollar headline figures that have spell bound our politicians.

Read more here.